How can Option One Mortgage close?
H&R Block Inc. is closing down Option One Mortgage today after being unable to come to terms with the sale to Cerberus Capital Management. H&R Block said today that it had worked with Cerberus in recent months to identify “mutually acceptable alternatives” for restructuring the April deal “in light of the widespread changes in mortgage market conditions and the substantial reduction in new lending by Option One.” The discussions, “did not lead to a mutually acceptable agreement,” and H&R Block and Cerberus agreed to terminate the agreement.
This makes me kind of sad. Option One is a company many of us in the business learned subprime from. They have been around a long time. I figured somehow they would find a way to stay in business through this sub prime mess. I know a lot of great people who have worked there and wish them well in their job search. With $40 billion in originations, Option One was one of the 10 largest subprime lenders in 2006.
“The principal business of H&R Block is helping millions of individuals and thousands of businesses meet their needs in connection with tax planning and filing tax returns, not making subprime mortgage loans,” H&R Block’s Interim Chief Executive Officer Alan Bennett said. “H&R Block’s board is committed to maximizing value for shareholders while exiting the subprime mortgage business in an orderly manner.” They plan to honor the loans in their current pipeline which is a nice move considering the quick exit of many other subprime companies recently. The quick exits of Option One’s competitors left countless borrowers high and dry with no mortgage.
Read H&R Blocks press release on closing Option One.
Read this Inman News link on this story here.
